Savola Group, Saudi Arabia’s largest food products company, posted a rise in first quarter net profit and revenue for 2019.
The company’s Q1 2019 net profit amounted to 6.3 million Saudi riyals ($1.68 million), compared to a net loss of 84.3 million riyals in Q1 2018.
The company’s revenue rose 5.48 percent in Q1 2019 to 5.39 million riyals, compared to 5.11 million riyals in Q1 2018, beating Arqaam Capital’s estimates by 10.2 percent.
“We believe that volume and pricing improvement across food and retail segments drove sales (revenue) beat,” Michel Salameh, associate director, research at Dubai-based Arqaam Capital, told Zawya by email.
The company’s shares were trading 2.38 percent higher on Thursday at 32.25 riyals by 13:40 GST and have added 20.34 percent so far this year. Arqaam Capital has a “Buy” rating on Savola, with a target price of 39 riyals.
“On our numbers, the company meets both liquidity and size requirements for inclusion into both the MSCI and FTSE indexes and has a provisional weight of 4bps (basis points)," in both indices, Salameh said. Given the amount of funds tracking these indices, this suggest a passive inflow of $196 million through its inclusion into MSCI and $97 million through its FTSE Russell addition.
Savola also said in a statement to the Saudi stock market on Thursday that it plans to issue sukuk denominated in Saudi riyals, as part of a sukuk programme of up to 5.3 billion riyals, to "fulfill the company's financial and strategic needs". (Read more here).
(Reporting by Gerard Aoun; Editing by Michael Fahy)
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